70 N.Y.2d 364 (1987)
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A judgment does not create a vested right that prevents the retroactive application of a statute designed to address a significant public interest, and res judicata does not bar a subsequent action based on an intervening change in the law when the new law serves a compelling public interest.
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Summary
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Hodes and Surkis, nursing home operators, were convicted of industry-related felonies. Initially, the Department of Health revoked their operating certificate, but the Court of Appeals reversed, citing conflict with Correction Law. After the legislature amended Public Health Law § 2806(5) to mandate revocation despite certificates of relief, the Commissioner initiated a second revocation proceeding. The court here determined that the retroactive application of the amended law was permissible and was not barred by res judicata because of the strong public interest in removing convicted felons from operating nursing homes.
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Facts
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Louis Hodes and Herman Surkis, owners of Franklin Park Nursing Home, pleaded guilty to grand larceny in 1979 related to Medicaid reimbursements. They received certificates of relief from disabilities. The Department of Health initially revoked their operating certificate, but the New York Court of Appeals reversed this decision, finding a conflict between Public Health Law § 2806 (5) and Correction Law § 701.
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Procedural History
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1. The Department of Health revoked petitioners’ operating certificate in 1981.r
2. The Appellate Division confirmed the revocation.r
3. The Court of Appeals reversed, finding conflict with Correction Law § 701. (56 NY2d 930).r
4. The Legislature then amended both Public Health Law § 2806 (5) and Correction Law § 701 (2) to require revocation.r
5. The Commissioner of Health commenced a second revocation proceeding in 1984.r
6. Special Term enjoined the proceeding based on res judicata.r
7. The Appellate Division affirmed.
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Issue(s)
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1. Whether the doctrine of vested rights bars a second administrative proceeding for revocation of a nursing home operating certificate based on a retroactive application of an amended statute?r
2. Whether the doctrine of res judicata bars a second administrative proceeding when the first proceeding failed under the prior version of the statute?
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Holding
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1. No, because there is no vested right in an operating license, and the public interest in removing convicted felons from operating nursing homes outweighs any reliance on the prior judgment.r
2. No, because the intervening change in law created a new cause of action, and precluding the second proceeding would undermine the public interest.
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Court’s Reasoning
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Regarding Vested Rights: The court acknowledged the traditional principle that legislation should not impair vested rights but noted the modern view involves a case-by-case balancing of policy considerations. The court found no vested right in the petitioners’ operating license. Any advantage gained from the first judgment was an unintended windfall. The court emphasized the strong public interest in regulating nursing homes and removing individuals convicted of industry-related felonies from operating them. The court stated, “[T]here is a strong public interest to be served by permitting the law to be enforced as amended in 1983, and that in this case the public interest overrides petitioners’ claimed constitutional objection.”
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Regarding Res Judicata: The court applied the